transmitted through the mechanism of the market, which often has imperfections other than those addressed by the subsidy. On 29 June 2012, C Rangarajan, Chairman of the Prime Minister's Advisory Council in view of present difficult economic position, advocated cutting down of fuel and fertiliser subsidies to keep the fiscal deficit within the budgeted level of 5.1 per cent. Subsidy issues in India Subsidies have increased in India for several reasons. In particular this proliferation can be traced to 1)the expanse of governmental activities 2) relatively weak determination of governments to recover costs from the respective users of the subsidies, even when this may be desirable on economic grounds, and 3) generally low efficiency levels of governmental activities. In the context of their economic effects, subsidies have been subjected to an intense debate in India in recent years. Some of the major issues that have emerged in the literature are indicated below: Whether the magnitude and incidence of subsidies, explicit and implicit, have spun out of control; their burden on government finances being unbearable, and their cost being felt in terms of a decline of real public investment in agriculture. Whether agricultural subsidies distort the cropping pattern and lead to inter-regional disparities in development Whether general subsidies on scarce inputs like water and power have distorted their optimal allocation Whether subsidies basically cover only inefficiencies in the provision of governmental services Whether subsidies like (food subsidies) have a predominant urban bias Whether subsidies are mistargeted Whether subsidies have a deleterious effect on general economic growth of sectors not covered by the subsidies Whether agricultural subsidies are biased against small and marginal farmers How should government services be priced or recovery rates determined What is the impact of subsidies on the quality of environment and ecology Sustainability Issues An example of potential environmental or sustainability issues arising from the current subsidy structure can be seen interrelated problems of water and energy consumption in the agricultural sector. During the Green Revolution in the 1960s and 70s, India's agricultural productivity grew greatly, in part due to a dramatic increase in agricultural irrigation, particularly from groundwater sources. While that increase in irrigation has helped the nation feed itself, it has also created a groundwater crisis, the dimensions of which have become increasingly clear in recent years. Groundwater tables are falling in many areas of the country, from around 20 cm per year in Punjab